Chapter 5 - Business-level strategy: Creating and sustaining competitive advantages. After reading this chapter, you should have a good understanding of the following learning objectives: The central role of competitive advantage in the study of strategic management, and the three generic strategies: overall cost leadership, differentiation, and focus; how the successful attainment of generic strategies can improve a firm's relative power vis-à-vis the five forces that determine an industry's average profitability;. | Business-Level Strategy: Creating and Sustaining Competitive Advantages chapter 5 Three Generic Strategies 5- Exhibit Three Generic Strategies as Part of a Business-Level Strategy Source: Adapted and reprinted with the permission of The Free Press, a division of Simon & Schuster Inc. from Competitive Strategy: Techniques for Analyzing Industries and Competitors. Michael E Porter. Copyright © 1980, 1998 by The Free Press. All rights reserved. Business-level strategy = a strategy designed for firm or a division of the firm that competes within a single business. Generic strategies = an analysis of business strategy into basic types based on breadth of target market (industrywide versus narrow market segment) and type of competitive advantage (low-cost versus uniqueness). Generic strategies are plotted on two dimensions: competitive advantage and strategic target. The overall cost leadership and differentiation strategies strive to attain advantages industrywide, while focusers . | Business-Level Strategy: Creating and Sustaining Competitive Advantages chapter 5 Three Generic Strategies 5- Exhibit Three Generic Strategies as Part of a Business-Level Strategy Source: Adapted and reprinted with the permission of The Free Press, a division of Simon & Schuster Inc. from Competitive Strategy: Techniques for Analyzing Industries and Competitors. Michael E Porter. Copyright © 1980, 1998 by The Free Press. All rights reserved. Business-level strategy = a strategy designed for firm or a division of the firm that competes within a single business. Generic strategies = an analysis of business strategy into basic types based on breadth of target market (industrywide versus narrow market segment) and type of competitive advantage (low-cost versus uniqueness). Generic strategies are plotted on two dimensions: competitive advantage and strategic target. The overall cost leadership and differentiation strategies strive to attain advantages industrywide, while focusers have a narrow target market in mind. Three Generic Strategies Overall cost leadership is based on: Creating a low-cost position relative to a firm’s peers: see the experience curve & competitive parity Managing relationships throughout the entire value chain to lower costs Differentiation implies: Products and/or services that are unique & valued Emphasis on nonprice attributes for which customers will gladly pay a premium 5- Overall cost leadership = a firm’s generic strategy based on appeal to the industrywide market using a competitive advantage based on low-cost. Differentiation = a firm’s generic strategy based on creating differences in the firms product or service offering by creating something that is perceived industrywide as unique and valued by customers. Experience curve = the decline in unit costs of production as cumulative output increases. A business can learn to lower costs as it gains experience with production processes. Competitive parity = a firm’s .
